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Natural Gas Is ‘Lifeline’ for Monroe County

Shale Gives Hope Amid Ormet Woes

February 9, 2014
By CASEY JUNKINS - Staff Writer , The Intelligencer / Wheeling News-Register

HANNIBAL - When Monroe County Auditor Pandora Neuhart thinks about her county's future, she doesn't dwell on what might be with bankrupt Ormet Corp.; instead, she and others are looking to the natural gas industry as the answer for the county's long-term finances.

According to information from the Ohio Department of Natural Resources' Division of Oil and Gas Resources, Monroe County had eight producing Utica Shale wells during the third quarter of 2013, the latest period for which data is available. More than 60 drilling permits have been issued in the county, with a number of other wells drilled and ready for production, once infrastructure is in place.

While Ormet works through its bankruptcy, Magnum Hunter Resources is producing about 11.7 million cubic feet of natural gas daily from Ormet property directly across Ohio 7 from the Hannibal plant.

Article Photos

Photo by Casey Junkins
Bankrupt aluminum producer Ormet Corp. will sell 2,208 metric tons of alumina to Almatis Burnside.


Magnum Hunter is the parent company of Triad Hunter, which drills and fracks wells in the Upper Ohio Valley, as well as Eureka Hunter, which processes and transports natural gas via pipelines.

Both Neuhart and county Treasurer Judy Gramlich believe the county soon could see a major revenue boost from natural gas.

"The oil and gas is a real shot in the arm for us," Neuhart said. "Right now, we are seeing an increase in sales tax because people are buying stuff. It will probably be about two years before we really see money coming in from the oil and gas because that is when they will have the pipelines ready."

For November 2013, the latest figures available, Monroe County brought in more than $160,000 in sales tax revenue, up more than 10 percent from November 2012.

Add that to the new money in the county, and some are seeing things heading up.

"There are definitely some new millionaires in this county because of these oil leases," Gramlich added.

Ormet, though, continues to be a source of both contention and hope for many in the county.

On one hand, lawmakers such as Ohio Rep. Jack Cera, D-Bellaire, are pushing the Kasich administration, through legislation, to get involved by giving the governor power to directly intervene in Public Utility Commission of Ohio matters. Ormet's primary reason for bankruptcy has been the cost of power.

On the other, some of the former 700 workers now without a job are wondering just where the natural gas wealth being created through Ormet's property is going.

Although company officials at Ormet have been unavailable for comment, the bankrupt firm should be receiving production royalties for gas drawn from its property. Lease contracts throughout eastern Ohio have paid from as low as 12.5 percent to at least as high as 20 percent.

Wheeling attorney James Byrum Jr., who handles bankruptcy cases in Wheeling, said the royalties would likely be going to Ormet.

"They could use the money for operating costs. Or, a secured creditor could be getting them as collateral," Byrum said of the royalties.

Ormet is continuing to liquidate its inventory, as the company recently sold 2,208 metric tons of alumina to Almatis, the same company that purchased Ormet's former Burnside, La. facility for $39.5 million in December. Alumina becomes aluminum through the smelting process.

"Almatis is committed to make additional investments in the (Burnside) refinery to ensure its success as a dedicated specialty producer," said Taco Gerbranda, CEO of Almatis.

Unloading the alumina is just the latest step for Ormet, which closed its smelter in October. Court records show the company has also sold $3 million worth of copper rods to Libertas Copper; sold additional alumina to Trafigura for $281 per metric ton; and sold 51,841 metric tons of carbon anodes to Alcoa Inc.

Ormet filed for bankruptcy last February before slightly reducing its work force throughout 2013 to cut electricity costs. Following an October ruling by the Public Utilities Commission of Ohio, CEO Mike Tanchuk announced Ormet would suspend all operations and begin shuttering the plant.

"It is a shame that the governor of this state (John Kasich) could not have done anything for Monroe County," Gramlich said.

Along with members of the United SteelWorkers, Gramlich and Neuhart believe Kasich should have worked to get the PUCO, Ormet and American Electric Power to find a solution that would have kept the plant running. However, Kasich Press Secretary Rob Nichols has said the governor has no direct authority over the PUCO.

 
 
 

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